High-quality early education in Flint, MI; a new community center in Lafayette, IN; three new schools in Cleveland, OH; a primary health care facility in Louisville, KY; and a community center in Chicago, IL – What do these things have in common? They are all among the projects financed by IFF’s 2016 allocation of New Markets Tax Credits (NMTC).
Like most tax credits, New Markets incentivize investment. More specifically, NMTCs stimulate investment and economic growth in low-income urban neighborhoods and rural communities that often lack access to the private investment needed to grow businesses, create jobs, and sustain healthy local economies. The bipartisan program is known for its efficient use of tax dollars, generating $8 of private investment for every $1 of federal spending.
Since 2011, IFF has been allocated $208 million in NMTCs to community facilities in high-need areas, leveraging more than $440 million. The first few loans from IFF’s $80 million 2016 allocation have just closed, including these highlights:
- Flint Kids Learn – Flint, MI: IFF’s $7 million allocation of NMTCs will help finance construction of a new early childhood education facility for children living in the area affected by the 2014-2016 Flint Water Crisis. About 10,000 children aged 0-6 may have been exposed to lead through their drinking water, which can affect how a child’s brain develops – affecting IQ, ability to pay attention, and academic achievement. This state-of-the-art early education facility is meant to help mitigate some of those potential outcomes by providing full-day, full-year, wrap-around services to 220 children in the area. IFF’s research team provided analysis to strategically locate the facility in an area that combines a significant number of children under the age of 6, limited early education opportunities, and the highest predicted levels of lead exposure. The University of Michigan will be partnering with the operator to collect data and conduct research to help policymakers understand which practices are most effective at improving the lives of children and families in these circumstances.
- La Casa Norte – Chicago, IL: La Casa Norte manages three shelters and 102 permanent units of supportive housing, delivering services to more than 4,000 individuals across 47 zipcodes annually. IFF’s $6 million NMTC allocation will help finance construction of a new, mixed-use supportive housing and community center on Chicago’s West Side, where research shows an overwhelming demand for these services. The five-story, 47,000-square-foot space will include 25 units of permanent supportive housing, a food pantry and café serving the homeless, a youth drop-in center “safe space,” a community computer lab, and a community health center operated by long-time IFF partner Howard Brown Health Center.
- Faith Community Development Corporation North End Community Center – Lafayette, IN: Continuing the trend of co-location in the nonprofit world, the new 90,000-square-foot “Northend Community Center” will house 11 community-based nonprofits. These organizations will address youth, teens, singles, families, seniors, and Veterans through a wide range of programming, including supportive housing services, early education, a ‘social enterprise’ restaurant with job training opportunities, youth mentoring programs, a senior center with free meals, and a community center complete with gyms, athletic fields, and indoor pool. Faith Ministries will act as both the lead developer and master lease holder, offering tenants dramatically discounted leases that allow them to funnel more resources into their programming. IFF is supporting this sweeping new facility with $7 million in NMTC allocation.
NMTC deals typically flow to larger projects because of the complexity and transaction costs associated with the tax credits. But IFF wants to bring the benefits of NMTC financing – low rates, 7-year terms, and interest-only payments – to smaller community development projects too. That’s why IFF dedicated 20 percent of its 2016 NMTC allocation to our innovative Small Project Loan Fund.
The first Small Project loan to close is for Centers for New Horizons (CNH), a nonprofit that serves children and families at seven locations throughout the Bronzeville and Riverdale communities on the south side of Chicago. The relatively small $2 million allocation will allow CNH to refinance – and thus halve payments toward – a loan for its Effie Ellis Center, where nearly 150 children are served and 40 employees are housed. An additional $500,000 allocation will finance upgrades to CNH’s HVAC systems and fund predevelopment work on a property it owns in Bronzeville. IFF’s real estate team is partnering with CNH to explore development opportunities for the distressed property, which has landmark status and has been designated as a site to use for “charitable purposes” by the Elam House Trust.
“IFF is leveraging our NMTC allocation in really creative and strategic ways,” says Joe Schmidt, IFF’s Senior Director of Structured Finance. “We allocate NMTCs to high-impact projects in low-income communities throughout the Midwest, including places that haven’t traditionally been served by NMTCs, such as Louisville or central Indiana. We allocate to critical smaller community development projects through our Loan Pool. And we offer NMTC consulting services to clients applying for allocations elsewhere. This kind of distributed, diverse collection of projects is helping transform communities that need it most.”
Tags: : Capital Solutions, Early Childhood Education